What is balanace of payment?

Balance of payments is a statistical statement that summarizes transactions between residents & non-residents during a period. FEATURES OF BOP Systematic Record Fixed period of time Comprehensiveness: Double entry system Self-balanced Adjustment of Differences All items-Government and Components Of BOP Current Account:- The current account combines the transactions of the trade account and the services account. Includes all imports and exports of goods and services. Includes unilateral transfers of foreign aid. If the debits exceed the credits, then a country is running a trade deficit. If the credits exceed the debits, then a country is running a trade surplus. Non-Government

Capital Account:- : The capital account records all international transactions that involve a resident of the country concerned changing either his assets with or his liabilities to a resident of another country If foreign ownership of domestic financial assets has increased more quickly than domestic ownership of foreign assets in a given year, then the domestic country has a capital account surplus. On the other hand, if domestic ownership of foreign financial assets has increased more quickly than foreign ownership of domestic assets, then the domestic country has a capital account deficit.

Financial Account- The financial account (or Official reserve account) is the net change in foreign ownership of domestic financial assets

TERMS REALATED BOP The Official Settlement Concept Balance of Invisible Trade Balance of Visible Trade Errors and Omissions Unilateral Transfers Capital Account Convertibility (CAC)